Are you an expert in human emotion?
Most market behaviour is largely driven by emotional shifts of traders and investors and it is often broadly represented by the following chart.
The tricky part is that until it’s all over, it’s not that obvious. Market cycles are never the exact same shape and they certainly don’t always come in the same sizes. So you might think the market is just reaching hope, but in reality there’s mass euphoria and the top is about to be hit.
That’s why it’s so hard, you never truly know what part you are in. You have to use all of the resources at hand to make an educated judgement and always protect yourself as a trader or investor.
Cryptocurrency at present
Right now cryptocurrency is undeniably experiencing some form of a bull market. Prices are shooting up and have been for months now. There are anonymous projects coming out of nowhere and making millions. In fact, there are even meme coins being formed and making people rich. The best example is the one literally called MEME.
The DeFi hype is certainly here. Everyone has noticed. And it’s brought along the question – is this 2017 all over again?
Of course, 2017 was the famous cryptocurrency bull market where millions were made and subsequently lost once the market collapsed throughout 2018.
But the level of evident hype and positive sentiment right now is making people wonder where we are in the famous market cycle image because really, they want to know whether they should be getting more involved or start to exit before the top.
Look at the trends
There’s no sure-fire way to know where we are, but it helps to dig into the data a bit to try and get a gauge of where we might be.
To start off, let’s look at Google trends. Here we’re looking at the search interest of cryptocurrency over time. Notice how high the interest was at the peak of the 2017 bull run compared to now – it’s not even close.
Now, let’s look at cryptocurrency and DeFi:
As you can see, according to Google the interest in cryptocurrency and DeFi is not even comparable to the levels that were reached during 2017.
Next, we’ll look at the previous market cycles in cryptocurrency and how they’ve each grown in size.
This chart is by Anthony Bertolino and it does not guarantee any future price performance. However, it does eloquently represent the market cycle history of Bitcoin, which shows a similar pattern three times. A quick bull market, a bear market, a visible expansion and then a reaccumulation phase pre-empting bull market.
Looking at the Bitcoin chart now, it certainly appears that we’ve completed the expansion and reaccumulation stages and we’re stepping into the bull market.
Previous trends would suggest that the following bull market would be bigger than the 2017 one, although past price performance absolutely does not guarantee future moves.
Pairing it together
Google trends is showing that interest is nowhere near where it was in 2017. Patterns suggest that price could make a new all-time high. Meanwhile, prices are going nuts. You can put that together and draw your own conclusions. Most people see this as very bullish.
Keep in mind that there is no obligation for there to be as much interest this time as there was before. Perhaps cryptocurrency had its shot back in 2017 and now most people will be scared to go again. Thus, the market cycle would not be as pronounced this time around.
Truthfully, only time will tell. However, if you’re bullish on cryptocurrency long term, it’s certainly promising to think that we’re only at the beginning here and the data could be used to back it up.